March 27 (Bloomberg) -- Brazil extended tax cuts on
appliances such as refrigerators and washing machines, and
reduced levies on other goods, as it seeks to help manufacturers
hurt by a slowdown in economic growth and a surge in imports.

Finance Minister Guido Mantega said that the tax cuts,
which were set to expire this month and are now being extended
until June 30, will save jobs and boost consumption in Latin
America’s biggest economy.

“The industry’s end of the bargain is a commitment to
maintaining employment,” Mantega told reporters in Sao Paulo
yesterday before a meeting with industrialists. “There can’t be
layoffs in these sectors.”

The tax breaks are the latest effort by President Dilma
Rousseff’s government to stimulate the economy, whose 2.7
percent growth last year trailed crisis-bound Germany and other
major Latin American nations. Industrial output in January fell
2.1 percent, the biggest decline in more than three years.

Tax cuts on white goods will benefit manufacturers
including affiliates of companies such as Panasonic Corp. and
Samsung Electronics Co. Ltd. The nation’s furniture, wallpaper,
lampshade and flooring industries will also benefit from the tax
breaks, which will cost the government 489 million reais ($269
million) in lost revenue this year, he said.

Mantega said that the government is preparing to reduce
payroll taxes for labor intensive industries including makers of
furniture, shoes, auto parts and ships

Slowing Growth

Economic growth slowed by more than half last year, from
7.5 percent in 2010, after the government raised interest rates,
curbed public spending and took measures to slow credit
expansion amid a surge in prices.

Since August, Rousseff’s administration has reversed course
in an effort to ensure economic growth of at least 4.5 percent
this year. The central bank has reduced the benchmark interest
rate five times and said that borrowing costs will probably fall
to just above the 8.75 percent record low.

In addition to weaker growth, industrialists have been
complaining of a surge in imports fueled by 28 percent gains in
the currency since the end of 2008.

After a 30 percent surge in car imports last year, the
government decided to protect local carmakers by raising taxes
on vehicles that are made abroad. Chery Automobile Co. Ltd. from
China challenged the measure in court, while Japan’s government
complained to the Geneva-based World Trade Organization that the
measure was protectionist.